Buying a house of our own is possibly one of the biggest decisions one takes in their lifetime. But, often in the process of making our dream homes a reality we end up going overboard and the result is, you owning the home while neck deep in crisis. Well, that isn’t such as desirable scenario, is it?
But, don’t you worry, with a proper plan in hand one can still achieve their goal of holding the keys of their dream house while their heads still well above the water. The main key here is to not take a reckless decision under a broker’s pressure and end up owning something which you didn’t want to.
1) Know what you want– This requires a lot of research. Go through the Property Supplement of your newspaper, circle in some projects and then do a thorough study of the projects by going through their website, Facebook pages online. This will help you understand what type of house you’re looking for and what are the current property trends and rates. It is often seen that people do an extensive research while buying things like Smartphones, cars etc. but when it comes to buying a house, they believe whatever their realtor or broker feeds them. This shouldn’t be the case. After all, this is going to one of the most expensive purchases of your entire lifetimes. Take the onus on yourself and do a primary research.
2)Budget– Once you’ve zeroed on the type of house you’re looking for, select a project within your budget. According to Financial Experts, the sum total of one’s EMIs (easy monthly instalments) must not be more than 40% of their take-home salary. Thus, if your monthly take-home salary is Rs. 1 Lakh, ideally your EMI shouldn’t exceed the Rs.40,000 per month mark. Further, if you have any other ongoing loans such as a car loan or a phone loan, the amount you can pay on a monthly basis on your home loan takes a further hit.
Suppose Rs.40,000 is the amount you can afford to pay as your EMI on your home loan and at an interest rate of 9.75%, you can take a loan for a time period of 15 years. According to emicalculator.net, based on the above parameters, the maximum loan amount that you will be eligible to borrow is Rs 38 lakhs. Now, the bank whose services you’re availing might agrees to give you a loan for 80 percent of the value of the house and 20 percent must be arranged by you on your own, then, the best you can do is buy a house worth Rs 47 lakhs.
In case you want to increase the loan amount, you can even apply for a loan by clubbing the income of yourself and your spouse.
The one thing that the young buyers need to take care is to have a contingency fund in hand in case something goes wrong like if one of the loan applicant’s loses their job or their is some big medical calamity etc.
3)Down Payment– The down payment amount is generally 20 percent of the total cost of the house. Unfortunately, this amount isn’t financed by the bank and hence will have to be single handedly arranged by you yourself. The way you can save for this account is by systematic planning and saving. For example, people contemplating to buy a house in a period of next three years, can go for low-risk instruments, such as fixed maturity plans (FMP) or fixed deposits (FD). On the other hand, if you have five to six years in hand, you can avail monthly income plans of mutual funds. For people who can afford to take a certain amount of risk, they can go ahead and invest in equity funds or balanced funds etc.
4) Make Saving a Habit– During the time period, when you’re saving up for the down payment of your dream house, try putting aside some additional cash every month. This will help you in getting an idea about how things will be money wise when you start paying those EMIs.
By exercising all these above mentioned easy methods, you will soon be peacefully able to sip in a hot cuppa of tea while siting on the leather couch of your dream house.